IN THIS VIDEO: Sapphire was speaking to Shadr. She was collecting her money from Shadr but Shadr was not able to pay Sapphire because Sapphire did something bad that affected Shadr's financial status.

In the dimly lit room, Sapphire faced Shadr with a mixture of anticipation and trepidation. The air was thick with tension, as the moment of reckoning had arrived. Sapphire, with her hands clasped tightly in front of her, was there to collect the debt owed to her, a sum that had been agreed upon under much different circumstances.

Shadr, on the other hand, sat slumped in his chair, his eyes avoiding Sapphire's steady gaze. The room was silent except for the ticking of the clock, marking the seconds that felt like hours to both of them. Shadr's financial situation had taken a turn for the worse, a direct consequence of an indiscretion committed by Sapphire. It was an act that she had thought inconsequential at the time, but its ripples had extended far and wide, eventually crashing into Shadr's life with the force of a tsunami.

The money that Sapphire sought was no longer within Shadr's grasp. His business, once thriving and prosperous, was now a shadow of its former self. The clients had disappeared, the contracts had been canceled, and the steady stream of income had dried up to nothing more than a trickle. All because Sapphire, in a moment of weakness, had made a choice that now haunted both their lives.

Sapphire remembered the day all too well. It was a decision made in haste, a solution to a problem that seemed insurmountable at the time. But the solution had been a poison, one that had seeped into the foundation of Shadr's enterprise and eroded it from within. She had not meant to cause harm, yet the damage was done, and the cost was more than just monetary.

As they sat in silence, the weight of guilt pressed heavily on Sapphire's shoulders. She knew that demanding payment from Shadr was futile, yet she was bound by her own needs, her own debts that clamored for attention. The cycle of cause and effect, of action and consequence, was playing out before her, and she was powerless to stop it.

Shadr finally looked up, his eyes meeting Sapphire's. There was no anger there, only resignation and a deep, unspoken understanding. Words were unnecessary; their shared history spoke volumes more than any conversation could. Sapphire slowly unclasped her hands and placed them on her lap, her posture softening.

"I'm sorry," she whispered, the words barely audible. It was an apology for more than just the current predicament. It was an acknowledgment of the pain she had caused, the trust she had broken, and the friendship she had jeopardized.

Shadr nodded, a gesture of forgiveness that was as much for himself as it was for Sapphire. They both knew that some debts went beyond money, beyond the tangible. They were debts of the heart, of the soul, and those were the ones that took the longest to repay.

In the end, Sapphire left without the money she had come for, but with something much more valuable. She left with the hope of redemption and the possibility of rebuilding what had been broken. And as she stepped out into the fading light of the day, she made a silent vow to right the wrongs of the past, not with words, but with actions.

For Shadr, the path ahead was uncertain, but he was not alone. The bonds that had been strained were not broken, and in the darkness that surrounded him, he found a glimmer of light. It was the light of forgiveness, of second chances, and of new beginnings. And with that light to guide him, he knew that the road to recovery, though long and arduous, was one he was ready to travel.

Hello fellow gamers! I'm here playing and livestreaming Skyrim Legendary Edition. The Elder Scrolls V: Skyrim Legendary Edition combines the base game with three DLC add-ons: Dawnguard, Hearthfire, and Dragonborn. It introduces features like legendary skills, mounted combat, and a higher difficulty mode. A must-play for fans of epic fantasy adventures!

For comments, questions or reactions then please post them in the comments section below. Also, please like the video, share the video, follow the channel and enable notifications.

Thank you for watching!

Links

• Rumble » https://rumble.com/register/kabalyero
• Twitter » https://twitter.com/kabalyero
• Website » https://www.kabalyero.info
• Ko-fi » https://ko-fi.com/kabalyero
• Youtube » https://www.youtube.com/kabalyero
• ProtonVPN » https://go.getproton.me/SHtQ

PC Specs

• CPU » AMD Ryzen 5 3400G
• GPU » NVIDIA GeForce GTX 1050
• RAM » 16 GB Generic Memory

FTC Disclosure: This post or video contains affiliate links, which means I may receive a commission for purchases made through my links.

#skyrim #skyrimle #oldrim

Last week, the Biden administration announced that it would unveil a second attempt at issuing blanket student loan forgiveness within the next few months. The announcement comes more than a year after its first attempt was blocked by the Supreme Court.

"The Biden-Harris Administration made a commitment to deliver student debt relief to as many borrowers as possible as quickly as possible," said Education Secretary Miguel Cardona in a statement last Wednesday. "And today, as we near the end of a lengthy rulemaking process, we're one step closer to keeping that promise."

The announcement builds on a release in April of draft rules that aim to enact student loan forgiveness primarily by expanding existing loan forgiveness programs. The Education Department says it has begun notifying borrowers about the coming rules and informing them about a deadline to opt out of forgiveness. 

The proposed rules target specific groups of borrowers, including borrowers who now owe more than they originally took out in loans due to accumulating interest, borrowers who have been in repayment for decades, and those who are eligible but not enrolled in existing forgiveness programs. Borrowers who enrolled in low-value degree programs, such as those that "failed to provide sufficient financial value, or that failed one of the Department's accountability standards for institutions" are also eligible for new forgiveness efforts. 

Last week's announcement also stated that those eligible would most likely receive forgiveness automatically, with no application or additional steps required.

If enacted, the rules could end up affecting even more borrowers than would have been affected by the Biden administration's first forgiveness plan. The Education Department predicts that if the proposed rules go into effect, the Biden administration would have made over 30 million borrowers eligible for forgiveness through its efforts over the last three years. In contrast, Biden's first attempt at blanket student loan forgiveness was predicted to impact just 27 million eligible borrowers.

"If finalized as proposed, these new rules would authorize relief for borrowers across the country who have struggled with the burden of student loan debt," reads last week's statement. "The Biden-Harris Administration has taken historic steps to reduce the burden of student debt and ensure that student loans are not a barrier to educational and economic opportunity for students and families."

The Education Department predicts that the finalized rules will be released sometime in the fall. However, with the election in November looming, it's doubtful whether the department can actually provide forgiveness before the end of Biden's term. And considering that legal challenges are almost certain to follow any attempt to enact large-scale loan forgiveness, it's unclear if there is any realistic chance that the Biden administration can enact this plan. At the moment, these latest efforts might be best thought of as a last-minute political stunt designed to energize young, college-educated voters rather than an earnest policy effort.

The post Biden Administration Says It Will Finalize Second Attempt at Blanket Student Loan Forgiveness This Fall appeared first on Reason.com.

Robert F. Kennedy Jr. won applause at the Libertarian National Convention by criticizing government lockdowns and deficit spending, and saying America shouldn't police the world.

It made me want to interview him. This month, I did.

He said intelligent things about America's growing debt:

"President Trump said that he was going to balance the budget and instead he (increased the debt more) than every president in United States history—$8 trillion. President Biden is on track now to beat him."

It's good to hear a candidate actually talk about our debt.

"When the debt is this large…you have to cut dramatically, and I'm going to do that," he says.

But looking at his campaign promises, I don't see it.

He promises "affordable" housing via a federal program backing 3 percent mortgages.

"Imagine that you had a rich uncle who was willing to cosign your mortgage!" gushes his campaign ad. "I'm going to make Uncle Sam that rich uncle!"

I point out that such giveaways won't reduce our debt.

"That's not a giveaway," Kennedy replies. "Every dollar that I spend as president is going to go toward building our economy."

That's big government nonsense, like his other claim: "Every million dollars we spend on child care creates 22 jobs!"

Give me a break.

When I pressed him about specific cuts, Kennedy says, "I'll cut the military in half…cut it to about $500 billion….We are not the policemen of the world."

"Stop giving any money to Ukraine?" I ask.

"Negotiate a peace," Kennedy replies. "Biden has never talked to Putin about this, and it's criminal."

He never answered whether he'd give money to Ukraine. He did answer about Israel.

"Yes, of course we should,"

"[Since] you don't want to cut this spending, what would you cut?"

"Israel spending is rather minor," he responds. "I'm going to pick the most wasteful programs, put them all in one bill, and send them to Congress with an up and down vote."

Of course, Congress would just vote it down.

Kennedy's proposed cuts would hardly slow down our path to bankruptcy. Especially since he also wants new spending that activists pretend will reduce climate change.

At a concert years ago, he smeared "crisis" skeptics like me, who believe we can adjust to climate change, screaming at the audience, "Next time you see John Stossel and [others]… these flat-earthers, these corporate toadies—lying to you. This is treason, and we need to start treating them now as traitors!"

Now, sitting with him, I ask, "You want to have me executed for treason?"

"That statement," he replies, "it's not a statement that I would make today….Climate is existential. I think it's human-caused climate change. But I don't insist other people believe that. I'm arguing for free markets and then the lowest cost providers should prevail in the marketplace….We should end all subsidies and let the market dictate."

That sounds good: "Let the market dictate."

But wait, Kennedy makes money from solar farms backed by government guaranteed loans. He "leaned on his contacts in the Obama administration to secure a $1.6 billion loan guarantee," wrote The New York Times.

"Why should you get a government subsidy?" I ask.

"If you're creating a new industry," he replies, "you're competing with the Chinese. You want the United States to own pieces of that industry."

I suppose that means his government would subsidize every industry leftists like.

Yet when a wind farm company proposed building one near his family's home, he opposed it.

"Seems hypocritical," I say.

"We're exterminating the right whale in the North Atlantic through these wind farms!" he replies.

I think he was more honest years ago, when he complained that "turbines…would be seen from Cape Cod, Martha's Vineyard… Nantucket….[They] will steal the stars and nighttime views."

Kennedy was once a Democrat, but now Democrats sue to keep him off ballots. Former Clinton Labor Secretary Robert Reich calls him a "dangerous nutcase."

Kennedy complains that Reich won't debate him.

"Nobody will," he says. "They won't have me on any of their networks."

Well, obviously, I will.

I especially wanted to confront him about vaccines.

In a future column, Stossel TV will post more from our hourlong discussion.

COPYRIGHT 2024 BY JFS PRODUCTIONS INC.

The post RFK Jr. Pays Lip Service to the Debt While Pushing Policies That Would Increase It appeared first on Reason.com.

In 2024, the federal budget deficit is estimated to reach nearly $2 trillion, according to new projections released by the Congressional Budget Office (CBO) this week. In February, the agency predicted that the deficit would only be $1.58 trillion. However, spending increases have caused the projected deficit to increase by $400 billion, a staggering 27 percent hike. 

According to the CBO, 80 percent of the spike in the deficit can be blamed on four sources of government spending.

The largest source, responsible for $145 billion of the increase, is changes to the federal student loan program that have resulted in massive waves of federal student loan forgiveness and increased forgiveness going forward.

Second, the CBO's report details how the costs for "deposit insurance have increased by about $70 billion because the Federal Deposit Insurance Corporation (FDIC) is not recovering payments it made when resolving bank failures in 2023 and 2024 as quickly as CBO previously anticipated."

Third, an additional $60 billion in cost increases came from additional legislation. And lastly, $50 billion in increased spending came from higher-than-expected Medicaid costs.

The long-term outlook for the budget deficit has increased too. In February, the CBO estimated that in 2034, the deficit would climb to $2.5 trillion. Its latest estimate now places that number as over $2.8 trillion.

"For the 2025–2034 period, CBO now projects that if current laws generally remained unchanged, the cumulative deficit would be $22.1 trillion. That amount is $2.1 trillion (or 10 percent) more than the $20.0 trillion the agency projected this past February," reads the CBO's report. "Measured in relation to the size of the economy, federal debt at the end of 2034 is now projected to equal 122 percent of gross domestic product (GDP); in February, debt at the end of that year was projected to equal 116 percent of GDP."

If the deficit continues to increase as the CBO predicts, the outcome could be disastrous. 

"As debt grows unabated, there is the risk of a sudden loss of confidence in bond markets, with investors demanding much higher interest rates that could trigger a debt doom loop and broader fiscal crisis," Cato Institute researchers Romina Boccia and Dominik Lett warned this week. "Congress and the Biden administration should cut spending now while the economy is growing and conditions are favorable for deficit reduction, alleviating pressure on interest rates and the federal debt to grow, and before a fiscal crisis forces their hands."

The post Federal Budget Deficit Forecast Jumps $400 Billion, Fueled by Student Debt Forgiveness appeared first on Reason.com.

Congressional Budget Office (CBO) projections provide valuable insights into how a big chunk of your income is being spent and reveal the long-term consequences of our government's current fiscal policies—you may endure them, and your children most certainly will. Yet, like most other projections looking into our future, these numbers should be taken with a grain of salt. So should claims that CBO projections validate anyone's fiscal track record.

So much can and likely will happen to make projections moot and our fiscal outlook much grimmer. Unforeseen events, economic changes, and policy decisions render them less accurate over time. The CBO knows this and recently released alternative scenarios based on different sets of assumptions, and it doesn't look good. It remains a wonder that more politicians, now given a more realistic range of possibilities, aren't behaving like it.

First, let's recap what the situation looks like under the usual rosy growth, inflation, and interest rate assumptions. Due to continued overspending, this year's deficit will be at least $1.6 trillion, rising to $2.6 trillion by 2034. Debt held by the public equals roughly 99 percent of our economy—measured by gross domestic product (GDP)—annually, heading to 116 percent in 2034.

The only reason these numbers won't be as high as projected last year is that a few House Republicans fought hard to impose some spending caps during the debt ceiling debate. The long-term outlook is even scarier, with public debt reaching 166 percent of GDP in 30 years and all federal debt reaching 180 percent.

No one should be surprised. To be sure, the COVID-19 pandemic and the Great Recession made things worse, but we've been on this path for decades.

Unfortunately, if any of the assumptions underlying these projections change again, things will get a lot worse. That's where the CBO's alternative paths help. Policymakers and the public can better see the potential risks and opportunities associated with various fiscal policy choices, enabling them to make more informed decisions.

For instance, the CBO highlights that if the labor force grows annually by just 0.1 fewer percentage points than originally projected—even if the unemployment rate stays the same—slower economic growth will lead to a deficit $142 billion larger than baseline projections between 2025 and 2034. A similarly small slowdown in the productivity rate would lead to an added deficit of $304 billion over that period.

Back in 2020, the prevalent theory among those who claimed we shouldn't worry about debt was that interest rates were remarkably low and would stay low forever. As if. These guys have since learned what many of us have known for years: that interest rates can and will go up when the situation gets bad enough. So, what happens if rates continue to rise above and beyond those CBO used in its projections? Even a minuscule 0.1-point rise above the baseline would produce an additional $324 billion on the deficit over the 2025-2034 period.

The same is true with inflation, which, as every shopper can see, has yet to be defeated. If inflation, as I fear, doesn't go away as fast as predicted by CBO—largely because debt accumulation is continuing unabated—it will slow growth, increase interest rates, and massively expand the deficit. To be precise, an increase in overall prices of just 0.1 points over the CBO baseline would result in higher interest rates and a deficit of $263 billion more than projected.

Now, imagine all these variations from the current projections happening simultaneously. It's a real possibility. The deficit hike would be enormous, which could then trigger even more inflation and higher interest rates. The question that remains is: Why aren't politicians on both sides more worried than they seem to be?

What needs to happen before they finally decide to treat our fiscal situation as a real threat? President Joe Biden doesn't want to tackle the debt issue. In fact, he's actively adding to the debt with student loan forgiveness, subsidies to big businesses, and other nonsense. Meanwhile, some Republicans pay lip service to our financial crisis, but few are willing to tackle the real problem of entitlement spending.

The time for political posturing is over. The longer we wait to address these issues, the more severe the consequences will be for future generations. It's time for our leaders to prioritize the nation's long-term economic health over short-term political gains and take bold steps toward fiscal responsibility. Only then can we hope to secure a stable and prosperous future for all Americans.

COPYRIGHT 2024 CREATORS.COM.

The post The Congressional Budget Office's Alternative Scenarios Forecast a Dire Economic Picture appeared first on Reason.com.

Is college worth it? Well, it depends on what degree you're getting and where you're getting it, according to a new paper from the Foundation for Research on Equal Opportunity (FREOPP), an economic opportunity think tank.

While more than three-quarters of all bachelor's degrees have a positive return on investment (ROI), according to the paper, master's and associate degrees are much riskier bets—with many costing students in the long run.

The paper, by Senior Fellow Preston Cooper, examined data from over 50,000 degree and certificate programs at thousands of American colleges and universities. Cooper's analysis looked at how much students were earning immediately after graduation, as well as how much they were making 10 years later. The paper also took into account a student's chance of dropping out when calculating a degree program's ROI.

In all, Cooper found that 31 percent of students are enrolled in a program with a negative ROI—meaning that "the earnings benefits of the degree are unlikely to fully compensate students for the cost and risk of pursuing post-secondary education."

However, different kinds of degrees were more likely to have a negative ROI than others. For example, 77 percent of bachelor's degrees and doctoral and professional degrees have a positive ROI. In contrast, just 57 percent of master's and associate degree programs have a positive ROI. 

For bachelor's degrees, fine arts, education, and biology programs had the lowest median ROI, while engineering, computer science, and nursing degrees gave students the highest long-term rewards.

However, where college students were enrolled also mattered when it came to ROI. For example, an English degree from the University of Virginia has a $581,925 positive return on investment—climbing to over $600,000 when only including students who graduated on time. In contrast, students at Virginia Commonwealth University—another public university—who majored in English have a negative $30,000 ROI, with just a $3,624 benefit for those who end up graduating on time.

"When choosing a college and program of study, students should evaluate several key variables that contribute to ROI. The most important is earnings after graduation," Cooper writes. "Besides starting salary, another critical factor is the institution's completion rate. While students' individual ability and motivation affects their likelihood of completion, research shows that college quality also has an impact on completion rates."

Cooper also pointed out just how much federal dollars go toward funding low-value degree programs. He found that 29 percent of the federal funding that went to the programs he studied went to programs with a negative ROI.

"That figure includes $37 billion in Pell Grants, $47 billion in loans to undergraduates, and $39 billion in loans to graduate students," Cooper writes. "Because ROI is negative for these programs, it's unlikely that most of those loan dollars will be repaid." 

This latest paper paints a detailed picture of the kinds of concerns prospective students and their families should take into account when deciding whether to enroll in college. While bachelor's degrees are still a good bet overall, students need to consider what they'll really get out of both the major they want to study and the school they've been accepted into.

The post Nearly Half of All Masters Degrees Aren't Worth Getting appeared first on Reason.com.

Following persistent technical issues with this year's updated, streamlined Free Application for Federal Student Aid (FAFSA) form, the Education Department has announced a $50 million program to help more students complete the form—next year.

The chunk of funding is aimed at "expand[ing] the availability of advisers, counselors, and coaches to support students and contributors through the FAFSA applications," according to a Monday press release.

"We are determined to close the FAFSA completion gap," Deputy Secretary of Education Cindy Marten said. "The funding we're announcing today will support states, districts, and community-based groups [to] build capacity and leverage their power to ensure that every student who needs help paying for college turns in their FAFSA form."

FAFSA is required for any college students seeking federal grants or loans. Most colleges also use the form to determine how much institutional financial aid to offer students. In a typical year, over 15 million students and their families fill out the FAFSA form. But as of late April, successful applications are down 24 percent this year due to ubiquitous technical bugs in the updated form.

This year's issues stem from the Consolidated Appropriations Act of 2021, which mandated that the Education Department release a simplified version of the FAFSA form. The updated form was released in December—more than two months later than the typical release date. Almost immediately, the form was plagued with errors and bugs that made it nearly impossible to complete for many students.

FAFSA's own website details many of the issues with the form since its release. While most can be fixed with complicated "workarounds," some kept affected students from filling out the form for months. In March, the Education Department even announced that they had incorrectly calculated the completed forms of 200,000 students, leading to some possibly receiving more generous financial aid offers than they were actually eligible for.

Instead of publicly committing to solving these issues for next year's form, the Education Department is attempting to ameliorate its mistakes by throwing money at the problem. Why make a better FAFSA when you can pay people to shepherd students and their families through an infuriatingly complex process?

According to USA Today, the Education Department usually releases a draft version of next year's FAFSA in February or March, but that hasn't happened yet—hardly a good sign for next year's form.

While it's unclear whether students will have a smoother FAFSA experience next year, at least they can say they've gotten an apology. 

"I apologize to the students and families that have had to deal with delays," Secretary of Education Miguel Cardona said during a congressional hearing this week. "I know how frustrating that is."

The post The Government's Solution to FAFSA Chaos: Spend $50 Million More appeared first on Reason.com.

President Joe Biden says, "I know how to make government work!"

You'd think he'd know. He's worked in government for 51 years.

But the truth is, no one can make government work.

Biden hasn't.

Look at the chaos at the border, our military's botched withdrawal from Afghanistan, the rising cost of living, our unsustainable record-high debt.

In my new video, economist Ed Stringham argues that no government can ever work well, because "even the best person can't implement change….The massive bureaucracy gets bigger and slower."

I learned that as a consumer reporter watching bureaucrats regulate business. Their rules usually made life worse for consumers.

Yet politicians want government to do more!

Remember the unveiling of Obamacare's website? Millions tried to sign up. The first day, only six got it to work.

Vice President Joe Biden made excuses: "Neither [Obama] and I are technology geeks."

Stringham points out, "If they can't design a basic simple website, how are they going to manage half the economy?"

While bureaucrats struggled with the Obamacare site, the private sector successfully created Uber and Lyft, platforms like iCloud, apps like Waze, smartwatches, etc.

The private sector creates things that work because it has to. If businesses don't serve customers well, they go out of business.

But government is a monopoly. It never goes out of business. With no competition, there's less pressure to improve.

Often good people join government. Some work as hard as workers in the private sector.

But not for long. Because the bureaucracy's incentives kill initiative.

If a government worker works hard, he might get a small raise. But he sits near others who earn the same pay and, thanks to archaic civil service rules, are unlikely to get fired even if they're late, lazy, or stupid.

Over time, that's demoralizing. Eventually government workers conclude, "Why try?"

In the private sector, workers must strive to make things better. If they don't, competitors will, and you might lose your job.

Governments never go out of business.

"Companies can only stay in business if they always keep their customer happy," Stringham points out. "Competition pushes us to be better. Government has no competition."

I push back.

"Politicians say, 'Voters can vote us out.'"

"With a free market," Stringham replies, "the consumer votes every single day with the dollar. Under politics, we have to wait four years."

It's another reason why, over time, government never works as well as the private sector.

Year after year, the Pentagon fails audits.

If a private company repeatedly does that, they get shut down. But government never gets shut down.

A Pentagon spokeswoman makes excuses: "We're working on improving our process. We certainly are learning each time."

They don't learn much. They still fail audits.

"It's like we're living in Groundhog Day," Stringham jokes.

When COVID-19 hit, politicians handed out almost $2 trillion in "rescue" funds. The Government Accountability Office says more than $100 billion were stolen.

"One woman bought a Bentley," laughs Stringham. "A father and son bought a luxury home."

At least Biden noticed the fraud. He announced, "We're going to make you pay back what you stole!

No. They will not. Biden's Fraud Enforcement Task Force has recovered only 1 percent of what was stolen.

Even without fraud, government makes money vanish. I've reported on my town's $2 million toilet in a park. When I confronted the parks commissioner, he said, "$2 million was a bargain! Today it would cost $3 million."

That's government work.

More recently, Biden proudly announced that government would create "500,000 [electric vehicle] charging stations."

After two years, they've built seven. Not 7,000. Just seven.

Over the same time, greedy, profit-seeking Amazon built 17,000.

"Privatize!" says Stringham. "Whenever we think something's important, question whether government should do it."

In Britain, government-owned Jaguar lost money year after year. Only when Britain sold the company to private investors did Jaguar start turning a profit selling cars people actually like.

When Sweden sold Absolut Vodka, the company increased its profits sixfold.

It's ridiculous for Biden to say, "I know how to make government work."

No one does.

Next week, this column takes on Donald Trump's promise: "We'll drain the Washington swamp!"

COPYRIGHT 2024 BY JFS PRODUCTIONS INC.

The post No One Can Make Government Work appeared first on Reason.com.

Another Tax Day has come and gone, and most Americans believe they pay too much. One recent poll revealed that 56 percent say they pay more than their fair share. Unfortunately, I fear this is just the beginning considering the insane level of debt Washington policymakers have accumulated over the years. With this in mind, here are some important facts about our tax system that you might not know.

The payroll tax is the heaviest burden for most taxpaying Americans, but the income tax is more visible and painful to a lot of people. While we are accustomed to it—and while it affects some Americans' decisions about how much to work, invest, or save—the income tax didn't exist for most of our country's life.

In 1895, the Supreme Court ruled against a direct tax on the incomes of American citizens and corporations, something that had been included in the previous year's Wilson-Gorman Tariff Act. The court found that such a tax violated the constitutional requirement that tax apportionments among the states be based on population. It took a constitutional amendment—the 16th—to eventually change that and pave the way for the modern income tax.

The very first Internal Revenue Service Form 1040, introduced in 1913 after the ratification of the 16th Amendment, was remarkably straightforward compared to what we know today. It was only four pages long, including instructions, and the top tax rate was 7 percent on incomes above $500,000, which is over $15 million in today's dollars. Some people were horrified by a 7 percent tax and warned that it could put us on a slippery slope to higher rates—maybe even above 10 percent (!)—imposed on a vast majority of people. They were called crazy for fearing such a thing.

And yet, as predicted by a few realists, the income tax rate not only increased, but the threshold at which it's applied went down. During the 1950s and the Eisenhower administration, the top marginal tax rate on incomes reached 91 percent for individuals. This rate applied to incomes over $200,000 (about $2 million today) for single filers and $400,000 (about $4 million today) for married couples filing jointly. These high taxes were part of a broader policy to manage post-war fiscal adjustments and fund federal programs. These rates also failed to raise as much money as you would think due to many loopholes in the tax code.

While the top marginal rate is much lower today, the income tax code remains remarkably complicated. Will McBride, a scholar at the Tax Foundation, recently wrote that "as of 2021, the U.S. income tax code was 4.3 million words long and growing. That's much longer, and presumably much more complicated, than tax codes found in other countries." There are several reasons for this.

First, many welfare programs are administered through the tax code. In recent testimony before the Senate Budget Committee, the Cato Institute's Chris Edwards wrote, "The tax code is an increasing mess. The number of official tax expenditures has risen from 53 in 1970 to 205 today, making IRS administration and enforcement ever more difficult. We know from experience that complex tax expenditures, such as the low-income housing tax credit and earned income tax credit, generate substantial errors and abuse."

In addition, contrary to common belief, the U.S. income tax system is actually quite progressive. According to the Tax Foundation, "though the top 1 percent of taxpayers earn 19.7 percent of total adjusted gross income, they pay 37.3 percent of all income taxes. Just 3 percent of taxes are paid by the lowest half of income earners." Maintaining this progressivity through all kinds of tax provisions increases the complexity of the code.

This progressivity is generally ignored by those who argue that taxing the rich is the solution to reducing the burgeoning U.S. national debt. Soaking the rich, while perhaps appealing in its simplicity, misses the scale of the problem. Brian Riedl, a Manhattan Institute senior fellow, noted that if we were to confiscate 100 percent of the income of everyone making over $500,000 per year, it would fund the government for less than a year. This puts into perspective the enormity of the $34 trillion national debt versus the income of the rich.

Taxing the rich is a convenient distraction hiding the reality that if spending isn't cut, taxes will have to be raised on everyone, a lot. On this tax week, I suggest Congress starts cutting.

COPYRIGHT 2024 CREATORS.COM.

The post This Tax Week, Remember That the Federal Income Tax Is Relatively New appeared first on Reason.com.

"I fixed student loan programs to reduce the burden of student debt for nearly four million Americans," President Biden bragged during his State of the Union address on Thursday night. "Such relief is good for the economy because folks are now able to buy a home, start a business, even start a family."

Despite failing to enact blanket student loan forgiveness, Joe Biden has still managed to forgive more than $130 billion in federal student loans since taking office in 2021—and due to a series of Education Department rule changes, even more loans are set to be forgiven in the coming years.

While Biden lauded his forgiveness scheme as "good for the economy," Biden's student loan reforms are in fact likely to make degrees more expensive to obtain in the coming years.

When the Education Department announced its original plan to forgive up to $20,000 in federal student loans per borrower in 2022, they also ushered in several, less attention-grabbing rule changes to the federal student loan program. Chief among them was a major change to income-driven repayment (IDR), a popular way for lower-income borrowers to repay their loans.

Under the REPAYE plan, previously the most popular IDR plan, borrowers were required to make regular monthly payments of 10 percent of their discretionary income (calculated as earnings above 150 percent of the federal poverty rate) for 20 years in order to receive forgiveness. But in 2022, Biden announced the Education Department would replace the REPAYE plan. 

In its place, the Saving on a Valuable Education (SAVE) plan is a significantly more generous alternative, only requiring monthly payments of 5 percent of borrowers' discretionary income (now calculated as earnings above 225 percent of the federal poverty rate), with forgiveness after just 10 years for balances less than $12,000. Late or incomplete payments would still count during the required repayment period, unlike under the REPAYE plan.

While income-driven repayment plans are generally targeted at low-income borrowers who might not be able to afford a traditional repayment plan, the SAVE plan is so generous that it is likely to attract a wide swath of wealthier borrowers. With borrowers required to pay back such a small portion of their loans, universities have a clear incentive to boost prices and encourage students to enroll in the SAVE plan.

"The system has gotten so generous that it's not really a loan anymore," Preston Cooper, a senior fellow at The Foundation for Research on Equal Opportunity told Reason. "It's more like a grant. And I think at that point, you'll start to see colleges saying, 'Hey, students aren't going to have to pay back their loans in full. So why don't we raise our prices, have students take out more loans, and the loans will just get forgiven by taxpayers?'"

In all, the new IDR plan is estimated to cost taxpayers nearly as much as Biden's original attempt at forgiving $475 billion over the next decade (blanket forgiveness was estimated to cost up to $519 billion). While Biden claimed that his recent forgiveness would help swaths of Americans "buy a home start a business even start a family," it certainly isn't typical taxpayers—the majority of whom do not have the benefits of a college degree, or the student loans to match—who will end up benefiting.

Ultimately, Biden's loan forgiveness efforts are best thought of as a purely political attempt to cater to a large portion of the Democratic base. Forgiving student loans does nothing to make it easier to attend college without taking on student loans—or for young Americans to reach the middle class, regardless of their educational path.

The post Biden Is Wrong About Student Debt Forgiveness appeared first on Reason.com.

The Republican chairman of the House Budget Committee made news recently by announcing that if his party is serious about changing the fiscal path we are on, they'll have to consider raising taxes. Politics is about compromise, so the chairman is right. Every side must give a little. However, "putting taxes on the table" is not as simple a fix to our debt problems as some think.

Looking at recent Congressional Budget Office reports, one can have no doubts about the fiscal mess. Annual deficits of $2 trillion will soon be the norm. Interest payments on the debt will exceed both defense and Medicare spending this year and become the government's largest budget item. With no extra revenue available, the Treasury will have to borrow money to cover these expenses. Meanwhile, we're speeding toward a Social-Security-and-Medicare fiscal cliff that we've known of for decades, and we'll reach it in only a few years.

Talking about the need for a fiscal commission to address Washington's mountain of debt, the committee chair, Rep. Jodey Arrington (R–Texas), told Semafor, "The last time there was a fix to Social Security that addressed the solvency for 75 years, it was Ronald Reagan and Tip O'Neill, and it was bipartisan. It had revenue measures and it had program reforms. That's just the reality." He made these comments after some people warned that a fiscal commission is a gateway only to raising taxes.

I understand the worry. That's what the most recent deficit reduction commission tried to do. And while I don't believe this is what Arrington is planning, I offer a warning to the chair and to the future commission: If the goal is truly to improve our fiscal situation, as defined by reducing the ratio of debt to gross domestic product (GDP) or reducing projected gaps between revenue and spending, increasing tax revenue should be limited to the minimum politically possible.

For one thing, our deficits are the result of excessive promises made to special interests—mostly seniors in the form of entitlement spending—without any real plans to pay. The problem is constantly growing spending, not the lack of revenue and taxes. The common talking point from the left that rich people don't pay their fair share of taxes is a distraction. Not only is our tax system remarkably progressive, but there are not enough rich people to fleece to significantly reduce our future deficits.

Furthermore, the work of the late Harvard economist Alberto Alesina has established that the best way to successfully reduce the debt-to-GDP ratio is to implement a fiscal-adjustment package based mostly on spending reforms. A reform mostly geared toward tax increases will backfire as the move will slow the economy in the short and longer terms, causing it to ultimately fail to raise enough revenue to reduce the debt relative to GDP. Legislators, unfortunately, have made this mistake many times without learning any lesson—at least until the deal that was cut in 1997.

As a 2011 New York Times column by Catherine Rampell reminded us, until then, all deficit-reduction deals were very tax-heavy. What the article didn't mention is that they failed to reduce the deficit. What distinguishes the 1997 deal is that it cut both spending and taxes. The result was the first budget surplus in decades helped by a fast-growing economy. Now, this lesson doesn't mean that a fiscal commission must cut taxes, but it does caution against attempting to reduce the debt largely by raising taxes.

Another risk looms in the idea of a tax-and-spending compromise; that the tax increases will be implemented while the spending cuts won't. We have many examples of this pattern, but I'll recount just one: In 1982, President Ronald Reagan made a deal with Congress (the Tax Equity and Fiscal Responsibility Act) which would have raised $1 in revenue for every $3 in spending cuts.

There were tax hikes, indeed. But instead of spending cuts, Reagan got lots of spending increases. Remembering the story years later in Commentary magazine, Steven Hayward wrote, "By one calculation, the 1982 budget deal actually resulted in $1.14 of new spending for each extra tax dollar."

The moral of this story is that putting revenue on the table to reduce the debt has a bad track record. As such, the chairman, who I believe is serious about putting the U.S. on a better fiscal path, will have to be careful about whatever deal is made.

COPYRIGHT 2024 CREATORS.COM.

The post A Bipartisan Tax Hike Won't Fix This Deficit appeared first on Reason.com.

Earlier this week, lawmakers on the House and Senate Appropriations Committees put forward six spending bills that would fund the government through the end of the year. In a press release, Republicans on the House committee bragged that the bills would "save taxpayers more than $200 billion over the next ten years"—a period of time over which the Congressional Budget Office predicts the national debt will expand by $20 trillion and eclipse the nation's gross domestic product.

Some of those savings come from cuts to federal law enforcement agencies, including the FBI and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF). Unfortunately, even those cuts are much more modest than they appear.

In their press release, House Republicans boasted that the appropriations package "utilizes the power of the purse to address the weaponization of the growing bureaucracy within the FBI and ATF." Specifically, they do this by "reversing [ATF's] anti-Second Amendment overreach…by significantly reducing its overall funding by $122 million, a 7% decrease" from 2023, as well as holding the FBI "accountable for targeting everyday Americans by reducing its overall operating budget by $654 million and cutting its construction account by 95%."

But these already-meager cuts don't involve very much actual cutting.

The FBI's salaries and expenses totaled over $10 billion in 2023, and it requested over $11 billion for 2024; the appropriations bill would grant $10.6 billion—a bit less than the FBI wanted but only about one-half percent less than last year's budget and certainly nothing approaching the 6 percent cut Republicans bragged about.

Republicans get around this with some tricky math: In a 2022 omnibus spending bill, the Bureau received $652 million toward the construction of a campus in Huntsville, Alabama. Republicans include the $652 million when touting a 6 percent cut, even though the money apportioned for salaries and expenses barely budged.

In fact, when Republicans bragged about "cut[ting] the FBI's construction account by $621.9 million"—for a whopping 95 percent decrease—that precipitous drop uses the one-time Huntsville cash as its starting point. Besides, the FBI only asked for a $61.9 million construction budget, which would have constituted a 90 percent decrease on its own.

Meanwhile, the ATF received $1.672 billion for salaries and expenses in 2023, while the appropriations bill would apportion $1.625 billion—a decrease of just 2.8 percent, not the 7 percent drop House Republicans claimed. That supposed 7 percent cut of $122 million comes from adding the $47 million cut in salaries and another $75 million cut from construction costs. The ATF did not request any construction money in its 2024 budget, so boasting that this a cut is laughable. Just like with the FBI, judging salaries and expenses in an apples-to-apples comparison yields a much more modest cut.

Any sort of fiscal discipline should be welcomed, of course. But it's not like Republicans are dedicated to pruning federal law enforcement agencies across the board.

"The Drug Enforcement Administration was an outlier in the bill, as it would receive a modest funding bump," writes Eric Katz at Government Executive. The bill would fund the DEA with $2.57 billion; when accounting for revenue from diversion control programs, Republicans say the department would receive "$42.4 million more" than it did in 2023.

The bill also directs not only the DEA but also the FBI to prioritize the policing of fentanyl. The FBI is directed "to allocate the maximum amount of resources" to target the "trafficking" of fentanyl and other opioids. There's no sign of any recognition that prohibition is exactly why fentanyl has proliferated in the first place and that harm reduction measures would be much safer and more effective than a law enforcement solution.

In fact, Republicans openly state in their press release that the cuts are not intended to save taxpayers money, noting that the bill "right-siz[es] agencies and programs and redirects that funding to combat fentanyl and counter the People's Republic of China."

Clearly, when the federal government consistently spends much more than it takes in, there is room to cut and an imperative to do so. It's unfortunate, then, that Republican lawmakers are bragging about plans to cut $200 billion over 10 years—1 percent of the anticipated federal debt accrued in that time—and it's even more disturbing to know that they're fudging the numbers to even get that much.

The post Republicans Use Fuzzy Math To Claim Large FBI, ATF Cuts in Budget Bill appeared first on Reason.com.

America is celebrated for its economic dynamism and ample and generously paid employment opportunities. It's a nation that attracts immigrants from around the world. Yet Americans are bummed, and have been for a while. They believe that life was better 40 years ago. And maybe it was on some fronts, but not economically.

Surveys repeatedly demonstrate that Americans view today's economy in a negative light. Seventy-six percent believe the country is going in the wrong direction. Some polls even show that young people believe they'll be denied the American dream. Now, that might turn out to be true if Congress continues spending like drunken sailors. But it certainly isn't true based on a look back in time. By nearly all economic measures, we're doing much better today than we were in the 1970s and 1980s—a time most nostalgic people revere as a great era.

In a recent article, economist Jeremy Horpedahl looked at generational wealth (all assets minus all debt) and how today's young people are faring compared to previous generations. His findings are surprising. After all the talk about how Millennials are the poorest or unluckiest generation yet, Horpedahl's data show them with dramatically more wealth than Gen Xers had at the same age. And this wealth continues to grow.

What about income? A new paper by the American Enterprise Institute's Kevin Corinth and Federal Reserve Board's Jeff Larrimore looks at income levels by generation in a variety of ways. They find that each of the past four generations had higher inflation-adjusted incomes than did the previous generation. Further, they find that this trend doesn't seem to be driven by women entering the workforce.

That last part matters because if you listen to progressives and New Right conservatives, you might get a different story: that today's higher incomes are only due to the fact that both parents must now work in order for a family to afford a middle-class lifestyle. They claim that supporting a family of four on one income, like many people did back in the '70s and '80s, is now impossible. Believing this claim understandably bums people out.

But it's not true. One of its many problems, in addition to the data evidence provided by Corinth and Larrimore, is that it mistakenly implies that single-income households were the norm. In fact, as early as 1978, 50 percent of married couples were dual earners and just 25.6 percent relied only on a husband's income. I also assume that there are more dual-income earners now than there were in the '80s. While this may in fact be true for married couples (61 percent of married parents are now dual-earners), because marriage itself has declined, single-earner families have become relatively more common.

Maybe the overall morosity on the economy has to do with the perception that it's more expensive to raise a family these days than it used to be. Another report by Angela Rachidi looks at whether the decline in marriage, fertility, and the increase in out-of-wedlock childbirths are the result of economic hardship. She finds that contrary to the prevailing narrative, "household and family-level income show growth in recent decades after accounting for taxes and transfers." Not only that, but "the costs of raising a family—including housing, childcare, and higher education costs—have not grown so substantially over the past several decades that they indicate an affordability crisis."

So, what exactly is bumming people out? We may find an answer in the 1984 Ronald Reagan campaign ad commonly known as "Morning in America." It begins with serene images of an idyllic American landscape waking up to a new day. It features visuals of people going to work, flags waving in front of homes, and ordinary families in peaceful settings. The narrator speaks over these images, detailing improvements in the American condition over the past four years, including job creation, economic growth, and national pride.

I believe this feeling is what people are nostalgic about. It seems that they are nostalgic about a time when America was more united and it was clearer what being American meant. Never mind that this nostalgia is often based on an incomplete and idealized memory of an era that, like ours, was not perfect.

This is a serious challenge that we need to figure out how to address. One thing that won't help, though, is to erroneously claim that people were economically better off back then and call on government to fix an imaginary problem.

COPYRIGHT 2024 CREATORS.COM.

The post The Economy Is Doing Way Better Than Many Believe appeared first on Reason.com.

On Wednesday, the Biden Administration announced $1.2 billion in additional student loan forgiveness for more than 150,000 borrowers. This particular round of forgiveness was previously announced last month, though the exact cost of the debt relief was not previously known.

"The Biden-Harris Administration has now approved nearly $138 billion in student debt cancellation for almost 3.9 million borrowers through more than two dozen executive actions," a Wednesday press release stated. "From Day One of his Administration, President Biden vowed to fix the student loan system and make sure higher education is a pathway to the middle class—not a barrier to opportunity."

This latest slate of forgiveness is part of the Education Department's sweeping changes to how the federal government handles student loan repayment. As part of the Biden Administration's original attempt to forgive up to $20,000 in federal loans per borrower, they also made several major changes to other student loan programs. Most notably, they introduced the Saving on a Valuable Education (SAVE), a new income-driven repayment (IDR) program designed to be much more generous than previous IDR plans.

For example, under the REPAYE plan, which was the most popular IDR plan before SAVE replaced it, monthly payments were set at 10 percent of borrowers' discretionary income, defined as earnings above 150 percent of the federal poverty line, with forgiveness coming after 20 years of consistent payments. 

For borrowers in the new SAVE plan, their monthly payment is only 5 percent of their discretionary income, which is now defined as income above 225 percent of the federal poverty line. If the borrower's balance is less than $12,000, they'll now get forgiveness after just 10 years.

As part of the SAVE plan rollout, the Education Department announced last month that any borrowers who have been paying back their loans for 10 years or more, under any program, and have a remaining balance of less than $12,000 can enroll in the SAVE plan and get automatic forgiveness. While the original announcement did not estimate how much forgiveness would be dolled out, Wednesday's update released the staggering $1.2 billion price tag.

This recent glut of loan forgiveness shows how, even if Biden's attempt at blanket loan forgiveness was defeated at the Supreme Court last year, that doesn't keep his administration from spending billions on student loan forgiveness. Biden's one-time student loan forgiveness proposal was estimated to cost taxpayers more than $500 billion, but the estimated cost of the SAVE plan over the next decade is almost as much, coming in at $475 billion. 

While the Supreme Court halted Biden's most outrageous attempt to forgive massive amounts of federal student loans, the Education Department's wide authority to make sweeping changes to student loan policy means that widespread debt forgiveness—and the huge bill to taxpayers—is here to stay.

The post The Biden Administration Has Forgiven Another $1.2 Billion in Federal Student Loans  appeared first on Reason.com.

This week's featured article is "The Real Student Loan Crisis Isn't From Undergraduate Degrees" by Emma Camp.

This audio was generated using AI trained on the voice of Katherine Mangu-Ward.

Music credits: "Deep in Thought" by CTRL and "Sunsettling" by Man with Roses

The post <I>The Best of Reason</I>: The Real Student Loan Crisis Isn't From Undergraduate Degrees appeared first on Reason.com.